NEW DELHI: Gold prices eased on Tuesday as a firmer dollar made bullion expensive for holders of other currencies, while concerns that the US Federal Reserve will tighten its monetary policy sooner than expected also dented the yellow metal’s appeal. Gold prices are struggling in India amid weaker global cues.

The dollar index strengthened 0.1 per cent against rivals. Gold is seen as a hedge against inflation, though a rate hike by the Fed will increase the opportunity cost of holding bullion and dull its appeal. Bullion tends to fall out of favour amid a tighter monetary policy.

China’s net gold imports via Hong Kong more than halved in May from the prior month as demand faltered amid fresh coronavirus-led restrictions. Despite the price dip, retail gold demand in India, world’s second largest consumer of physical gold, has remained weak.

Gold futures on MCX were down 0.16 per cent, or Rs 74, at Rs 46,934 per 10 gram. Silver futures shed 0.37 per cent, or Rs 255, to Rs 68,978 per kg.

“COMEX gold trades marginally lower near $1775/oz after a 0.2 per cent gain yesterday. Gold is pressurized by the stable US dollar, Fed’s monetary tightening concerns and drop in Chinese imports last month,” said Ravindra Rao, VP – Head Commodity Research at Kotak Securities.

In the spot market, highest purity gold was sold at Rs 47,089, while silver was priced at Rs 68,204 on Monday, according to the Indian Bullion and Jewellers Association.

“However, supporting price is renewed virus concerns and mixed economic data from major economies. ETF inflows also showed some buying interest. Gold may remain range bound below $1800/oz until there is more clarity about Fed’s monetary policy stance,” Rao said.

Trading strategy

“We expect gold prices to trade sideways to up for the day with COMEX gold support at $1,760 and resistance at $1,790 per ounce. MCX Gold August support lies at Rs 46,700 and resistance at Rs 47,300 per 10 gram,” said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

Global markets

Spot gold was down 0.2 per cent at $1,775.42 per ounce, as of 0100 GMT. US gold futures fell 0.2 per cent to $1,776.40.

Silver eased 0.2 per cent at $26.03 per ounce, palladium slipped 0.1 per cent to $2,683.19. Platinum was steady at $1,090.33.